Finance

Hedge funds endure worst drawdowns since Liberation Day amid Iran war turmoil

Global hedge funds are posting their sharpest drawdowns since Liberation Day as the Iran conflict roils markets. A JPMorgan note attributes the slide to an oil shock and unwinding crowded trades, amplifying risk-off across stocks, bonds, and currencies.

📅 March 18, 2026
⏱️ 2 min read
Hedge funds endure worst drawdowns since Liberation Day amid Iran war turmoil

Key Takeaways

  • Hedge funds' drawdowns are the worst since Liberation Day, per JPMorgan strategists led by Nikolaos Panigirtzoglou.
  • Iran conflict triggers a spike in oil prices and a broad market selloff that unravels crowded hedge fund trades.
  • Crowded dollar-short positions, especially in emerging markets, have unwound, removing a key support for risk assets.
  • MSCI World Index is down more than 3% since Feb. 28; the U.S. Dollar Index is up about 2%.
  • Long/short equity funds are down about 3.4% in March; the HFR industry average down about 2.2% in March.

People Involved

  • Nikolaos Panigirtzoglou Global Markets Strategist, JPMorgan
  • Kathryn Kaminski Hedge fund strategist
  • Don Steinbrugge Founder/CEO, Agecroft Partners
  • Noah Hamman Hedge fund executive

Entities Involved

  • JPMorgan Chase & Co. (JPM) Global financial services firm; source of the note
  • Hedge Fund Research (HFR) Industry data provider for fund performance
  • MSCI World Index Global equity index
  • U.S. Dollar Index (DXY) Currency index measuring the dollar's strength

MarketMoodz Analysis

The note’s reading implies heightened fund-level risk and potential liquidity strains as oil shocks and risk-off sentiment squeeze crowded trades. For investors, that translates into tighter risk budgeting, faster unwinds in alt bets, and closer scrutiny of liquidity profiles across mandates.

Historically, geopolitically driven selloffs have disrupted traditional correlations and exposed fragilities in diversified portfolios. After hedge funds posted their strongest annual gains in 16 years in 2025, the current drawdown underscores the duration risk of oil-disruption shocks and the importance of flexible risk controls. Watch oil prices, the pace of dollar shorts unwinding, and any shifts in macro hedge fund allocations as the conflict persists.

Source: Original Article

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